Diamond Sports Group, the parent company of the Bally Sports networks, has filed for Chapter 11 bankruptcy. Credit: Jerome Miron-USA TODAY Sports

Diamond Sports Group, parent of regional sports channel chain Bally Sports, tonight asked a federal bankruptcy court for an emergency hearing Tuesday because it cannot resolve demands from the NBA, NHL, and MLB for documents like cable distribution agreements and the contract with Amazon Prime Video to stream the RSNs games.

Discovery disputes are hardly uncommon in legal processes, but the clock in this case is ticking loudly. There is a Chapter 11 plan confirmation hearing scheduled for July 29, which the leagues have said or suggested they would oppose if they are not convinced the plan is financially viable.

The leagues want details of the distribution contracts with carriers like Fubo, Charter, Cox, and DirecTV, as well as historical information on how financially important Comcast is to DSG. Comcast dropped the RSNs last month after failing to renew.

DSG said in its request that these contracts are protected by confidentiality agreements (in fact the RSN company added in a footnote it cannot even disclose the confidentiality agreements, because, well, they are confidential). It offered to show them privately to the judge.

“Such contracts each contain confidentiality provisions that, in substance, prevent the Debtors from disclosing the contracts or the information therein, to third parties absent the consent of the Debtors’ counterparty or a court order,” DSG wrote.

MLB is also asking DSG for all the details since the start of last year for its NHL and NBA contracts; when they expire, was the rights fee reduced, and so forth.

Sinclair bought the RSNs in 2019 from Walt Disney for $9.6 billion. Much of that was financed with debt heaped on its subsidiary, DSG. At its peak, DSG had 19 RSNs and over 40 NBA, NHL, and MLB teams. However, the purchase came as cord-cutting exploded and put a major financial squeeze on DSG, which filed for Chapter 11 in March last year.

Today, DSG has contracts for at least the rest of the season for 11 MLB teams (several have longer-term deals) and is negotiating with the NHL and NBA about their next seasons.

Until early January, DSG’s Chapter 11 seemed designed to wind down operations by the end of 2024. But the company did a 180-degree turn and secured new debt financing, a legal settlement with Sinclair, and perhaps most importantly the deal with Amazon, which came with a financing commitment.

“The Debtors have conducted several `meet and confers’ with the Leagues, with the Distributors, with Amazon, and then moderated a `joint’ session with the Leagues and Distributors, all over the past two weeks,” DSG wrote in the motion. “Two categories of issues permeating these discussions remain unresolved: (1) historical and projected revenues that the Debtors have received, and expect to receive, based on the terms in the Debtors’ distribution agreements with the Distributors, as well as most favored nation provisions (`MFNs’) and other highly sensitive information in such contracts; and (2) information related to the Debtors’ recent contracts with Amazon.”

MFNs are clauses in cable and digital distribution agreements that if DSG reaches a deal that is more favorable to a distributor than the other ones, then the new terms carry over to their contracts.

In a list of questions MLB sent DSG May 23, and which was included in the filing, MLB asks, “State whether Your distribution agreements with Charter, Cox or DIRECTV contain ‘most favored nation’ provisions that could be triggered by the terms discussed or exchanged in Your negotiations with Comcast.”

MLB wants to know if the Comcast talks were stalled by the carrier demanding the RSNs move to a paid sports tier, which would limit distribution. DSG disclosed in the motion the distributors agreed to reveal whether an MFN has been triggered, but not the details of the MFN.

According to a timeline included in the motion, June 28 is the deadline for DSG to comply with the documents requests, and list of questions, known in legal parlance as interrogatories. Depositions are scheduled to start July 10.

The leagues also want to see the Amazon commercial agreement. No dice so far.

“​​The Debtors, Amazon, and the Leagues have so far been unable to resolve the parties’ respective concerns over disclosure in any fashion of the Commercial Agreement.” DSG wrote.

The judge in the case is Chris Lopez (who also happened to be in the news today because he is also presiding over the Alex Jones bankruptcy). At the last hearing in the DSG case, Lopez agreed to move the confirmation hearing date from mid-June to late July date, given the sports leagues’ concerns. He strongly suggested that the date would not move again. DSG’s debtholders largely support the plan.

The NBA and NHL want certainty that the Bally RSNs will operate for the ‘24-’25 seasons and MLB is worried the Chapter 11 plan devised by DSG is not financially viable and could affect rights payments this season. Of course, the league can only suspect this, as, without the documents and answers it is seeking, it doesn’t know for sure.

Now it appears it’s up to Judge Lopez whether the leagues get the information that will convince them either way.

About Daniel Kaplan

Daniel Kaplan has been covering the business of sports for more than two decades. A proud founding reporter of SportsBusiness Journal, he spent the last four years at The Athletic.